According to auto news Autonews, BMW and Toyota are expected to further benefit when China promises to reduce vehicle import tariffs and further open up the Chinese auto market.
China is the world's largest auto market, and foreign automakers hope to enter the Chinese market in a better and more competitive way, and this voice has been around for decades. Now, foreign auto companies have entered the Chinese market and ushered in good news.
At the Boao Forum for Asia, Chinese President Xi Jinping said that China does not aim at pursuing a trade surplus and sincerely hopes to expand imports and promote the balance of current account balance. This year China will reduce the import tariffs on automobiles by a considerable margin, while reducing the import tariffs on some other products, and strive to increase the import of special advantage products with relatively concentrated needs of the people. Moreover, President Xi also stressed that China plans to relax restrictions on foreign joint ventures and that the government will introduce relevant policies as soon as possible.
Affected by this, China's domestic automakers BAIC, BYD and GAC's share price have all declined, because if China's current 25% auto import tariffs are lowered, the competitive advantage of foreign automakers will be even greater, more foreign brands. Will enter the Chinese market and compete with local brands.
At present, China is in an atmosphere of trade friction with the world's largest economy, and last week the Chinese government just proposed to impose a 25% tariff on US imports. In this context, during this Boao Forum for Asia, President Xi made a statement to the world to further open the auto market.
High-end car brands will especially feel the benefits of tariff cuts, as the production of high-end brands is rarely transferred to China. Among them, Toyota's Lexus will benefit more, because Lexus is the only high-end brand that has not been produced in China and has not been announced to be produced in China. Bloomberg analysts said: "This will be a boon to the Chinese luxury car market." Audi, the luxury car sales leader, began producing cars in China in 1996. GM Cadillac opened a factory in Shanghai in 2016.
In 2017, China imported a total of 1.22 million vehicles, accounting for 4.2% of the total sales of 28.9 million in the year. At the same time, at the Boao Forum for Asia, President Xi reiterated the commitment of China to open the auto market. During the two sessions, Premier Li Keqiang said that China will gradually reduce automobile import tariffs this year.
In addition to tariffs, when China requires overseas automakers to establish joint ventures with local Chinese automakers, the capital contribution must not exceed 50%. When this policy was introduced in the 1990s, China hopes to promote technology development by cooperating with global auto giants such as Volkswagen and GM to promote the development of China's auto manufacturing industry.
Honda Motors welcomed the commitment of China to further open the automotive market. Honda currently produces cars in China through two joint ventures. Ford Asian market leader Peter Fleet said the initial signs were "inspiring."
Cui Dongshu, secretary-general of the National Passenger Car Information Association, said that any reduction in tariffs would have a huge impact on Chinese automakers. At the same time, relaxing the control of auto joint ventures would have a long-term impact on the Chinese auto industry.
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